Robert Reich on wages, corporate profits

[Short commentary I heard on Marketplace the other night. He makes reference 
to Wal-Mart employing more workers than the auto industry, then talks about 
middle-class workers demanding more of the pie.  Ain't too many folks in Wal-
Mart making enough money to qualify for Robert Reich's middle class. -x]


The American economic pie is growing at a solid pace. The odd thing is how the 
pie is now sliced--between the portion going to profits, and the portion going 
to wages. According to the Commerce department, the wage slice is now smaller 
than its been in 38 years,while the slice going to after-tax corporate profits 
is bigger than its been since the government began tracking profits back in 
1947. This wage squeeze is hurting middle-class families, who, even if they 
own shares of stock,still depend mainly on wages.   

What's going on?  One possibility is that this lopsidedness is just the 
lingering and temporary effect of an unusually long jobs recession. So many 
Americans have been unemployed or underemployed so long they've lost a lot of 
bargaining power.  As we come out of the jobs recession, and the demand for 
employees returns to normal levels, workers will get raises, and the slice of 
the pie going to wages will grow to a more normal portion.

But there's another, and more disturbing possibility, and it seems somewhat 
more likely. The wage slice will stay historically low, and the profit slice 
high, because employees have permanently lost bargaining power.

Unions now represent fewer than 8 percent of private sector workers, a figure 
that's been dropping steadily for many years. Meanwhile, advances in 
telecommunications now enable many more companies to outsource to places like 
India and China where wages are far lower, or they can easily substitute 
computers and software for employees who might otherwise expect a raise. 

If these trends weren't enough to keep wages down, consider that big 
corporations are bigger and more powerful than ever. Think of Wal-Mart, now 
employing more Americans than the entire U.S. auto industry. Employers with 
this kind of clout can keep wages low simply by refusing to raise them. If I'm 
right, and the current lopsided apportioning of the American economic pie 
between wages and profits reflects the structure of the modern economy, mark 
my words, it's only a matter of time before the vast American middle class 
demands a fair portion of the pie. 

That may mean higher taxes on profits, and lower taxes on wages,in other 
words, a reversal of recent tax policy.

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